SME Times News Bureau | 31 Jan, 2020
The Economic Survey for the financial year 2019-20 has said
that the government needs to focus on increasing the literacy rate and policies
for ease of doing business and enhancing the entrepreneurial ecosystem in the
country.
The survey which was tabled in the Parliament on Friday by Finance Minister
Nirmala Sitharaman also suggested that better connectivity of villages through
tar roads would improve access to local markets and improve entrepreneurial
activity.
"Measures to increase the literacy levels rapidly through the institution
of more schools and colleges will spur entrepreneurship and consequently local
wealth creation," the survey said.
Literacy and education in the district level foster local entrepreneurship
significantly as per the Economic Survey. It said that the eastern part of
India has the lowest literacy rate of about 59.6 per cent according to the
census of 2011 and it is also the region in which new firm formation is the
lowest.
"In fact, the impact of literacy on entrepreneurship is most pronounced
when it is above 70 per cent."
It also advocated for privatization of education in line with privatisation of
engineering colleges in the country for enhancement of education capacity.
"Following the successful contribution of privatization of engineering
colleges to India's software exports, governments could also explore the
privatization of education to augment education capacity at all levels of
education."
The survey which reflects the economic health of the country said that policies
that foster ease of doing business and flexible labour regulation foster should
be undertaken, especially in the manufacturing sector.
As the manufacturing sector has the potential to create the maximum jobs,
states must focus on enabling ease of doing business and flexible labour
regulation to foster job creation.
Referring to the World Bank's "Data on Entrepreneurship", the survey
said that India ranks third in number of new firms created. The World Bank data
also shows that new firm creation has gone up dramatically in India since 2014,
it said.
"While the number of new firms in the formal sector grew at a cumulative
annual growth rate of 3.8 per cent from 2006-2014, the growth rate from 2014 to
2018 has been 12.2 per cent. As a result, from about 70,000 new firms created
in 2014, the number has grown by about 80 per cent to about 1,24,000 new firms
in 2018."
As per the survey prepared by the Chief Economic Advisor, going by India's new
economic structure, where their is comparative advantage in the services
sector, new firm creation in services is significantly higher than that in
manufacturing, infrastructure or agriculture.